Chinese company to buy shares of Canadian mineral firm for lithium resources
A worker operates on a production line at a lithium battery factory in Tangshan, north China's Hebei Province, Nov. 29, 2020. (Xinhua/Yang Shiyao)
Sichuan Yahua Industrial Group Co.,Ltd. (Yahua, 002497.SZ), a Chinese company focusing on lithium and civil explosive business, announced on April 17 that its wholly-owned subsidiary Yahua International Investment and Development Co., Ltd. has inked a share subscription agreement with Ultra Lithium Inc., a Canadian company focusing on exploration and development of lithium, gold and copper resources, reported Shanghai Securities News Monday.
According to the agreement, Yahua International Investment and Development Co., Ltd. intends to invest 5 million Canadian dollars to subscribe for 21.2766 million units of shares or 13.23 percent of the total share capital of Ultra Lithium Inc. at the price of 0.235 Canadian dollars per share.
It will also acquire 60 percent equity of a wholly-owned subsidiary of Ultra Lithium Inc. with cash, and take control of two lithium ore projects of the company.
According to the agreement, the 21.2766 million units of shares contain 21.2766 million common shares and 10.6383 million warrants. Both parties agree that Yahua International Investment and Development Co., Ltd. can convert the warrants into common shares at the strike price of 0.3 Canadian dollars per share within one year from the settlement day.
The above-mentioned two lithium ore projects are located in Ontario, Canada, and have a combined mining area of 26.72 square kilometers. The one in the Forgan Lake boasts an estimated resource of 6.4 million tonnes (metric tons), with an average grade of lithium oxide of 2.2 percent and alithium oxide equivalent of about 140,000 tonnes based on preliminary estimate. The one in the Georgia Lake has an estimated resource of 5.4 million tonnes, with an average grade of lithium oxide of 1.2 percent and a lithium oxide equivalent of about 65,000 tonnes based on preliminary estimate.
It's learned that in the first phase of the two projects, a lithium concentrate mining and processing plant with a capacity of 200,000 tonnes per year will be designed and constructed, which will have a continuous operation of no less than 10 years. In the second phase, the production capacity will be expanded to 400,000 tonnes according to further detailed exploration.
After the equity acquisition, the above-mentioned wholly-owned subsidiary of Ultra Lithium Inc. will become a joint venture between Yahua International Investment and Development Co., Ltd. and Ultra Lithium Inc. Ultra Lithium Inc. will continue to explore, discover, and acquire more lithium resources in Canada for the joint venture.
